Our Indian company's shares moved from one group company to another and the ultimate parent abroad did not change. The officer says 97 per cent of the shareholding changed and denies the brought forward losses. Which way does the Tribunal go?
On these facts the Tribunal decided with the taxpayer, but it supplied almost no reasoning of its own. The Delhi Bench dismissed the Revenue's appeal in a single paragraph, finding merit in the assessee's submissions and no material from the Revenue contradicting the Commissioner (Appeals). What it left standing is the Commissioner (Appeals)'s reasoning that s.79 stresses beneficial ownership, that the ultimate holding company remained the same throughout the restructuring, and that CIT v AMCO Power Systems Ltd applied. The Revenue's ground founded on Yum Restaurants failed with the appeal, but the Tribunal did not address that decision.
Decided by the ITAT (Challa Nagendra Prasad, Judicial Member and Avdhesh Kumar Mishra, Accountant Member) on 2025-11-26, reported as ITA No. 5826/Del/2024 (ITAT Delhi Bench 'G'), assessment year 2018-19. It bears on section 79, section 72, section 37 of the Income Tax Act 1961, in Assessment & Scrutiny, Appeals and How Tax Law Is Read matters.
The library carries AMCO Power and Yum Restaurants pulling in opposite directions on whether a movement of shares within a group attracts s.79. This is a Delhi Bench of the Tribunal — sitting under the Delhi High Court, which decided Yum Restaurants — dismissing a Revenue appeal whose express ground was that the Commissioner (Appeals) had not considered Yum Restaurants, without itself discussing either Yum or AMCO Power. That is how the divergence is being worked out in practice, and it tells you what to put in front of a Delhi officer. But weigh it carefully before leaning on it. The Tribunal wrote no reasoning of its own on the s.79 point beyond saying it found merit in counsel's submissions and that the Revenue had brought nothing to contradict the Commissioner (Appeals). And the taxpayer ran a second, independent argument — that the shares were issued pursuant to an amalgamation whose appointed date was 1 April 2013, so that on the Marshall Sons line there was no change in shareholding at all in or after the loss years — which the Tribunal did not separate from the first. So it is not possible to say from the order which ground carried, and the decision does not settle the AMCO versus Yum question for anyone.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The assessee, an engineering consultancy company, filed its return for assessment year 2018-19 declaring a loss of Rs. 3,16,95,696. In the assessment the officer disallowed a foreign exchange fluctuation loss of Rs. 2,89,12,346 as notional, added provisions of Rs. 64,54,780, and invoking s.79 denied the carry forward of losses of the earlier years on the ground that there had been a substantial change in shareholding — 97 per cent of the shares having changed in financial year 2015-16. Before the Commissioner (Appeals) the assessee explained that prior to an amalgamation 99.98 per cent of its share capital was held by Air Liquide Global E & C Solutions India P Ltd, that after the amalgamation Air Liquide International France acquired 97.79 per cent of the shares, but that the ultimate holding company throughout remained L'Air Liquide SA, so that ultimate beneficial ownership was unchanged. The assessee relied on CIT v AMCO Power Systems Ltd, 379 ITR 375. It also contended that the appointed date of the amalgamation sanctioned by the Delhi High Court was 1 April 2013, that the shares were issued later pursuant to that order, and that there had accordingly been no change in shareholding after 31 March 2014, relying on Marshall Sons & Co. (India) Ltd. and Intas Pharmaceuticals Ltd. (2023) 454 ITR 421. The Commissioner (Appeals) allowed the appeal and directed the officer to allow the carried forward losses for assessment years 2014-15 and 2015-16. The Revenue appealed, contending among other grounds that the Commissioner (Appeals) had not considered the Delhi High Court's decision in Yum Restaurants (India) Private Limited v ITO.
The Revenue's appeal was dismissed in its entirety. On the s.79 ground the Tribunal found merit in the assessee's submissions, recorded that the Revenue had brought no material to contradict the finding of the Commissioner (Appeals), and found no infirmity in that order, so the direction to allow the carried forward losses for assessment years 2014-15 and 2015-16 stood (para 12). The Commissioner (Appeals)'s deletion of the foreign exchange disallowance was likewise left undisturbed.
The Tribunal's own reasoning is confined to para 12, where it says it heard both parties, considered the facts and the material, found merit in the submissions of the assessee's counsel, noted that the Revenue had produced nothing contradicting the Commissioner (Appeals)'s finding, and therefore found no infirmity in the order under appeal. The substantive reasoning it left standing is that of the Commissioner (Appeals), reproduced at para 6 of the order: s.79 requires that not less than 51 per cent of the voting power be beneficially held by the same persons, which stresses beneficial ownership rather than the immediate holding of voting power, the object being that a new owner should not purchase the shares of a company merely to obtain the benefit of set-off of its earlier business losses; on the facts the ultimate beneficial ownership remained with L'Air Liquide SA throughout the restructuring. Counsel's distinction of Yum Restaurants, recorded at para 10, was that in that case there was nothing to show any agreement or arrangement making the holding company the beneficial owner of the shares and that the question of piercing the veil did not arise at the assessee's instance.
After thoughtful consideration of facts and material available on the record, we find merit in submissions/contentions/arguments of the Ld. Counsel. The Revenue has not brought any material on the record to contradict the finding of the Ld. CIT(A).
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Handle my notice → Ask a CA on WhatsAppOn these facts the Tribunal decided with the taxpayer, but it supplied almost no reasoning of its own. The Delhi Bench dismissed the Revenue's appeal in a single paragraph, finding merit in the assessee's submissions and no material from the Revenue contradicting the Commissioner (Appeals). What it left standing is the Commissioner (Appeals)'s reasoning that s.79 stresses beneficial ownership, that the ultimate holding company remained the same throughout the restructuring, and that CIT v AMCO Power Systems Ltd applied. The Revenue's ground founded on Yum Restaurants failed with the appeal, but the Tribunal did not address that decision. This was decided by the ITAT (Challa Nagendra Prasad, Judicial Member and Avdhesh Kumar Mishra, Accountant Member) and bears on section 79, section 72, section 37 of the Income Tax Act 1961. It is reported as ITA No. 5826/Del/2024 (ITAT Delhi Bench 'G'), assessment year 2018-19. The library carries AMCO Power and Yum Restaurants pulling in opposite directions on whether a movement of shares within a group attracts s.79. This is a Delhi Bench of the Tribunal — sitting under the Delhi High Court, which decided Yum Restaurants — dismissing a Revenue appeal whose express ground was that the Commissioner (Appeals) had not considered Yum Restaurants, without itself discussing either Yum or AMCO Power. That is how the divergence is being worked out in practice, and it tells you what to put in front of a Delhi officer. But weigh it carefully before leaning on it. The Tribunal wrote no reasoning of its own on the s.79 point beyond saying it found merit in counsel's submissions and that the Revenue had brought nothing to contradict the Commissioner (Appeals). And the taxpayer ran a second, independent argument — that the shares were issued pursuant to an amalgamation whose appointed date was 1 April 2013, so that on the Marshall Sons line there was no change in shareholding at all in or after the loss years — which the Tribunal did not separate from the first. So it is not possible to say from the order which ground carried, and the decision does not settle the AMCO versus Yum question for anyone. If it applies to you, the first step is this: Draw the shareholding chart for the last day of each loss year and the last day of the year of set-off, and show at the top of it the entity whose beneficial ownership did not move.
The assessee, an engineering consultancy company, filed its return for assessment year 2018-19 declaring a loss of Rs. 3,16,95,696. In the assessment the officer disallowed a foreign exchange fluctuation loss of Rs. 2,89,12,346 as notional, added provisions of Rs. 64,54,780, and invoking s.79 denied the carry forward of losses of the earlier years on the ground that there had been a substantial change in shareholding — 97 per cent of the shares having changed in financial year 2015-16. Before the Commissioner (Appeals) the assessee explained that prior to an amalgamation 99.98 per cent of its share capital was held by Air Liquide Global E & C Solutions India P Ltd, that after the amalgamation Air Liquide International France acquired 97.79 per cent of the shares, but that the ultimate holding company throughout remained L'Air Liquide SA, so that ultimate beneficial ownership was unchanged. The assessee relied on CIT v AMCO Power Systems Ltd, 379 ITR 375. It also contended that the appointed date of the amalgamation sanctioned by the Delhi High Court was 1 April 2013, that the shares were issued later pursuant to that order, and that there had accordingly been no change in shareholding after 31 March 2014, relying on Marshall Sons & Co. (India) Ltd. and Intas Pharmaceuticals Ltd. (2023) 454 ITR 421. The Commissioner (Appeals) allowed the appeal and directed the officer to allow the carried forward losses for assessment years 2014-15 and 2015-16. The Revenue appealed, contending among other grounds that the Commissioner (Appeals) had not considered the Delhi High Court's decision in Yum Restaurants (India) Private Limited v ITO. The matter was decided on 2025-11-26 by the ITAT (Challa Nagendra Prasad, Judicial Member and Avdhesh Kumar Mishra, Accountant Member). On those facts the ITAT held as follows. The Revenue's appeal was dismissed in its entirety. On the s.79 ground the Tribunal found merit in the assessee's submissions, recorded that the Revenue had brought no material to contradict the finding of the Commissioner (Appeals), and found no infirmity in that order, so the direction to allow the carried forward losses for assessment years 2014-15 and 2015-16 stood (para 12). The Commissioner (Appeals)'s deletion of the foreign exchange disallowance was likewise left undisturbed.
The Tribunal's own reasoning is confined to para 12, where it says it heard both parties, considered the facts and the material, found merit in the submissions of the assessee's counsel, noted that the Revenue had produced nothing contradicting the Commissioner (Appeals)'s finding, and therefore found no infirmity in the order under appeal. The substantive reasoning it left standing is that of the Commissioner (Appeals), reproduced at para 6 of the order: s.79 requires that not less than 51 per cent of the voting power be beneficially held by the same persons, which stresses beneficial ownership rather than the immediate holding of voting power, the object being that a new owner should not purchase the shares of a company merely to obtain the benefit of set-off of its earlier business losses; on the facts the ultimate beneficial ownership remained with L'Air Liquide SA throughout the restructuring. Counsel's distinction of Yum Restaurants, recorded at para 10, was that in that case there was nothing to show any agreement or arrangement making the holding company the beneficial owner of the shares and that the question of piercing the veil did not arise at the assessee's instance. In the words reproduced by the source cited on this page: "After thoughtful consideration of facts and material available on the record, we find merit in submissions/contentions/arguments of the Ld. Counsel. The Revenue has not brought any material on the record to contradict the finding of the Ld. CIT(A)." The decision followed or applied CIT v AMCO Power Systems Ltd, (2015) 379 ITR 375 (Karnataka) — relied on by the Commissioner (Appeals) and left undisturbed; Yum Restaurants (India) Private Limited v ITO, ITA No. 349 of 2015 (Delhi) — distinguished on the submission recorded at para 10; Marshall Sons & Co. (India) Ltd., 89 Taxman 619 (SC) and Intas Pharmaceuticals Ltd., (2023) 454 ITR 421 — relied on for the appointed date of amalgamation.
It was decided by the ITAT on 2025-11-26 and is reported as ITA No. 5826/Del/2024 (ITAT Delhi Bench 'G'), assessment year 2018-19. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 79, section 72, section 37, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The Revenue's appeal was dismissed in its entirety. On the s.79 ground the Tribunal found merit in the assessee's submissions, recorded that the Revenue had brought no material to contradict the finding of the Commissioner (Appeals), and found no infirmity in that order, so the direction to allow the carried forward losses for assessment years 2014-15 and 2015-16 stood (para 12). The Commissioner (Appeals)'s deletion of the foreign exchange disallowance was likewise left undisturbed. It arises in Assessment & Scrutiny, Appeals and How Tax Law Is Read matters, on section 79, section 72, section 37 of the Income Tax Act 1961, and was decided by Challa Nagendra Prasad, Judicial Member and Avdhesh Kumar Mishra, Accountant Member. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Meet Yum Restaurants head on rather than ignoring it: in Yum there was nothing to show an agreement or arrangement making the holding company the beneficial owner of the shares, and the Court declined to pierce the veil at the assessee's instance. If the change followed a court or tribunal sanctioned amalgamation, plead the appointed date as an independent ground under Marshall Sons & Co. (India) Ltd. and Intas Pharmaceuticals Ltd. — on this order it may be the stronger of the two. Remember what is at stake and what is not: even if s.79 applies, it does not touch unabsorbed depreciation (CIT v Subhulaxmi Mills Ltd (SC)) or capital losses (PCIT v Burda Druck India Pvt Ltd (Delhi HC)).
Validity check could not be completed. Pronounced 26 November 2025. I did not search for later treatment and did not establish whether the Revenue has appealed under s.260A. This is a Tribunal order and binds nobody outside the case; on the underlying question the Karnataka and Delhi High Courts pull in opposite directions and no Supreme Court decision resolving them was found — a search for a special leave petition against AMCO Power returned nothing usable. The years in issue are governed by s.79 as it stood before its substitution with effect from 1 April 2020. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The order is internally inconsistent on dates and figures and a reader should not rely on its recitals without checking. The pronouncement is recorded as 26 November 2025 both in the header and in the closing line, but the despatch line at the foot reads 'Dated:26/11/2024'. The cause title reads 'Lurgi IndianInternational Services Private Limited' while the case is indexed as Lurgi India International Services. Ground 3 speaks of losses of assessment years 2014-15 and 2015-16 and the Commissioner (Appeals) extract does the same, but para 11 refers to the losses disallowed as pertaining to assessment years 2014-15 to 2016-17, and para 5 says the officer denied carry forward 'of AYs 2014-15 to 2015-16'. The Tribunal's own discussion of the s.79 issue is a single sentence in para 12 covering both issues in the appeal. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The Revenue's appeal was dismissed in its entirety. On the s.79 ground the Tribunal found merit in the assessee's submissions, recorded that the Revenue had brought no material to contradict the finding of the Commissioner (Appeals), and found no infirmity in that order, so the direction to allow the carried forward losses for assessment years 2014-15 and 2015-16 stood (para 12). The Commissioner (Appeals)'s deletion of the foreign exchange disallowance was likewise left undisturbed.
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